Posted on 05/08/2004 11:12:55 AM PDT by knighthawk
Next weekend, the Illinois Republican Party will decide whether to shed its old ways or stick with its image as the Republicrat/Demipublican Hybrid.
At its state convention May 14-15 in Collinsville, the GOP will choose its national committeeman, who will serve for the next four years. Up for re-election is Bob Kjellander. A vestige of the good old days when Republicans blurred with Democrats, Kjellander made more than $809,000 as consultant to Bear, Stearns & Co., the lead underwriter on a $10 billion bond deal for Gov. Blagojevich. The Democrat-controlled House favored the bond deal, but in the Senate it barely passed because of strenuous GOP opposition. Kjellander's fee was legal -- no question about that -- but his link to the Democratic governor's political destiny while serving as a top Republican officer and chairman of President Bush's 2004 campaign for the Great Lakes region opens him to questions about a conflict of interest.
All that's holding Kjellander in the job is his supposed friendship with Karl Rove, the president's top political adviser. They knew each other before Bush became president. How close are they? Local Republicans have been told that the tie means that Kjellander can deliver party funds for the state GOP to support its candidates and get-out-the-vote projects. In fact, Rove will be keynote speaker at the convention. But if Rove senses that Bush can't carry Illinois -- and Rove's job depends on this judgment -- would he funnel money here because Kjellander is committeeman? No way. And if it looks like Bush could do well here, will Rove sit on funds that should go to this state out of pique because his friend (I'm not sure how close a friend, maybe an acquaintance) got stiffed six months earlier by the convention? I don't think so.
A key challenger to Kjellander is state Sen. Steve Rauschenberger of Elgin. Rauschenberger, known for his candor and courage, is determined to change the Hybrid. As Senate Appropriations chairman, Rauschenberger opposed Gov. George Ryan on spending, and served several years in the penalty box while blusterer Ryan, a major figure in the Hybrid, was autocratically spending us into our current near-insolvency.
Also running is Bob Redfern, a general merchandise store owner from Fairfield. Rauschenberger has long cited Kjellander as a problem. While seeking the GOP nomination for U.S. Senate earlier this year Rauschenberger said, ''Bob Kjellander has got to go. Having him around in the leadership hurts reform.'' His major competitors ignored the issue and hunkered down, fearful that funds would be cut off by Rove if they murmured agreement. That crack didn't help Rauschenberger raise money for his run, but it endeared him to me anyhow. Anybody who wants to stick it to the Hybrid has my support.
What is the significance of the $800,000-plus fee Kjellander got from Bear Stearns? To find out, I asked Gary MacDougal, a successful businessman, former finance committee chairman of UPS when the company did the largest initial public offering in history, and former head of the finance practice at a major international consulting firm. MacDougal well understands how underwriting fees are applied and has been around the block politically, having been state GOP chairman and assistant campaign manager for George H. W. Bush in 1988. ''As the lead underwriter [in the Illinois bond deal], Bear Stearns received the largest fee -- some $8 million -- in return for taking the biggest share of the overall responsibility for the success of the offering and sharing the risk if the offering is unsuccessful and the bonds must be sold at a loss,'' MacDougal said. ''This money is often used to reward members of the Bear Stearns sales team for selling the bonds to the big institutions: insurance companies, pension funds, bond funds and the like."
MacDougal continues: ''What's not needed to sell the bonds is retained as Bear Stearns profit. It's the job of the client -- in this case, Illinois state budget director John Filan -- to negotiate the lowest possible fee consistent with getting the job done. Presumably, the taxpayers of Illinois could have saved $809,000 -- money badly needed in many areas, if Kjellander's 'services' weren't needed. If Bear Stearns had balked at a lower fee, competitive bidding could have been pursued, as Lt. Gov. Pat Quinn has stated.''
Meaning Kjellander has big Democratic clout. He's a top banana in the Hybrid.
Illinois Republicans have long bored everybody by piously calling for reform. Up to now, whenever a chance appeared, they turned the other way. Next weekend the decision should be easy.
Bush will be better served if the GOP disentangles itself from conflict of interest by saying bye-bye to the Hybrid.
Which guy do you mean - Rauschenberger or Kjellander?
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